Law Question [torts] (2 Viewers)

[theone123]

QUESTION ONE

James is an engineer working in project management in a merchant bank. His girlfriend Megan is a town planner. They have been living together in rented flats for five years and in late 2003 decided to think about investing together as well as buying a house. James discussed this with his work mates and friends Marty and Paul, in various investment divisions with the bank. Marty, a commercial lawyer, told him to get into the Sydney real estate market as this was easily the best investment around. Paul, a financial adviser, agreed that real estate was generally best although he said there had been rumours about Federal Capital Gains taxes being increased to a higher rate. James passed all this information on to Megan, who also told her mother Jenny.

James and Megan borrow $650,000.00 from the bank and used this and their savings to buy a property at Manly. They rented the property to some students from UWS and moved in with Jenny in her home to save some extra money. Jenny sold most of her bank shares and bought another property close in Manly, which she rented to students from University of Sydney. None of them tried to get any other financial advice.

In April 2004 the government of New South Wales announced a mini budget and imposed a new land tax on all investment properties. The property market in Sydney collapses and all three investors discover that their properties are now worth less that 80% of what they paid earlier in the year. Jenny is particularly upset as her shares would have maintained their value if she had not sold to but the property. As a result of the investment disaster Jenny suffers severe stress leading to clinical depression. She is unable to work in her usual occupation again.


Advise James, Megan and Jenny of any right they may have in this situation in the law of Negligence ONLY, giving full legal authority for your answers. Against whom would those rights, if any, be exercised, and why?

 

[theone123]

can someone help give advice on this question.

 

[Minai]

thanks for your replies. i thought it might be the supermarket where it is their responsibility to keep the supermarket in a certain condition. could you bring a seperate action against both of them?

having done torts last semester..
basically sue both - but always focus on the party that has the MOST money, which would obviously be the supermarket. Both parties could potentially be found negligent, but it makes more sense to sue the supermarket

 

[Minai]

can something help give advice on this question.

this question is fairly complex, and hard for me to answer without any casebooks
but yeah, context is important here - assuming we're talking about negligence on Paul and Marty's part ... did James & Megan pay Marty & Paul for the advice? was it reasonable for james & megan to rely on the advice, based on the setting (ie, was it over drinks at a pub, or in a formal meeting at an office).
Also, the fact they did not consult further advice could work against them...in regard to them not doing everything in their capacity to protect themselves from pure economic loss

There should be significant cases that address most of the issues in that question..just pull up a Torts/negligence textbook and read up on the "pure economic loss" sections

 

[Lazarus]

I've pointed out the obvious issues below:

James is an engineer working in project management in a merchant bank. His girlfriend Megan is a town planner. They have been living together in rented flats for five years (evidence of a close and loving - de facto - relationship) and in late 2003 decided to think about investing together as well as buying a house. James discussed this with his work mates and friends Marty and Paul (was the discussion simply 'as friends', or were his workmates discussing the issue in their capacity as 'experts'), in various investment divisions with the bank. Marty, a commercial lawyer (unlikely to be an expert on investments), told him to get into the Sydney real estate market as this was easily the best investment around (this could amount to a negligent misstatement). Paul, a financial adviser (and possibly an expert on investments), agreed that real estate was generally best although he said there had been rumours about Federal Capital Gains taxes being increased to a higher rate (provided warning of a risk - may still amount to a negligent misstatement - implies assumption of responsibility). James passed all this information on to Megan, who also told her mother Jenny (evidence of a close and loving relationship).

James and Megan borrow $650,000.00 from the bank and used this and their savings to buy a property at Manly. They rented the property to some students from UWS and moved in with Jenny in her home to save some extra money. Jenny sold most of her bank shares and bought another property close in Manly, which she rented to students from University of Sydney. None of them tried to get any other financial advice (evidence of reliance on the statements of the lawyer and financial advisor - but that reliance might not be reasonable).

In April 2004 the government of New South Wales announced a mini budget and imposed a new land tax on all investment properties (this is fine unless the tax was ultra vires - it probably wasn't). The property market in Sydney collapses and all three investors discover that their properties are now worth less that 80% of what they paid earlier in the year. Jenny is particularly upset as her shares would have maintained their value if she had not sold to but the property (kind of damage - pure economic loss). As a result of the investment disaster Jenny suffers severe stress leading to clinical depression (kind of damage - nervous shock/mental harm). She is unable to work in her usual occupation again (kind of damage - loss of earning capacity).

Advise James, Megan and Jenny of any right they may have in this situation in the law of Negligence ONLY, giving full legal authority for your answers. Against whom would those rights, if any, be exercised, and why?

They may all potentially have actions in negligence against Marty and Paul. Actions involving each of the following categories add extra tests that need to be satisfied in order for a duty of care to be held:

For negligent misstatements, see:
Hedley Byrne v Heller [1964] AC 465
Esanda Finance v Peat Marwick Hungerfords (1997) 188 CLR 241
Tepko v Water Board (2001) 206 CLR 1

For pure economic loss, see:
Perre v Apand (1999) 198 CLR 180
Hill v Van Erp (1997) 188 CLR 159
Caltex Oil v The Dredge "Willemstad" (1976) 136 CLR 529

For nervous shock/mental harm, see:
Gifford v Strang Patrick Stevedoring (2003) 198 ALR 100

The tests for breach of duty and the other stages remain the same as in a regular negligence action.

I'll leave it to you to work out how all of the above pieces fit together.

[Edit: Once again, Minai managed to summarise my post into a few sentences... ]

 

[theone123]

Thanks Laz and minai

 

[Fcuk!]

thanks for the helpful info guys

 

[Lazarus]

This is <a href="/james/Torts%20-%20Midsession%20Assignment.pdf">one of my torts assignments from last year</a>... it doesn't cover the same points (except for nervous shock/mental harm), but it should at least give you some idea as to how to write an answer to a problem question.

 

[theone123]

argh, this one is a menace.

QUESTION TWO

Louisa Reid is a young graphics designer keen to open her own business offering a one stop design shop. She had been looking around for suitable premises, but knew she had insufficient funds to finance the whole concept, so she asked her family for help.

Her cousin owned a number of business properties in Blacktown and agreed to let one to Louisa for half the rent he would normally charge. Louisa checked the building and told her cousin there were some alterations she would like to make to improve ventilation and allow easier access to the design studios. She told her cousin she would need to start on the alterations as soon as she received permits from the relevant local Council. She also undertook to pay for all the alterations herself; they were quoted at $39,000. However she told her cousin she did not want to waste these funds, so would not start unless her cousin was certain he would allow her to use the premises at half the normal rent.

Her cousin replied that he would let her know within a week if he changed his mind about allowing her to use the premises. Louisa had explained to him that the work would take about three months to complete which would give her time to start her marketing campaign. It would also give her time to complete some design concepts which she thought would bring in a suitable income prior to the business commencing in the new premises.

One week after speaking with her cousin Louisa approached the council, and commenced negotiations about work permits. Several weeks later, having received approval, work commenced.

Before any lease were signed and when the work was almost finished Louisa’s cousin told her he had received a better offer for the premises and was no longer willing to continue with the arrangements previously discussed.

Advise Louisa what rights, if any, she may have against her cousin, in these circumstances, and as to the possible remedies which may be available. Consider all reasonable possibilities and give full legal reasons for your answers.

 

[Minai]

hah Laz, your answer was more comprehensive, I just threw ideas around.

theone123: in regards to the second question..
this seems to be a case on promissory estoppel (High Trees case)

that being the case, you need to establish the test for promissory estoppel when used as a sword, not a shield from the Waltons Stores case. Here, even though there is no formal written finalised contract, estoppel still applies but you have to prove that with findings from Waltons v Maher and Legione v Hateley. Basically, you have to prove that Louisa is at a material disadvantage as a result of acting upon the representation by her cousin if her cousin is allowed to go back on her promise.

This stuff should be in your textbook..

 

[Lazarus]

Louisa Reid is a young graphics designer keen to open her own business offering a one stop design shop. She had been looking around for suitable premises, but knew she had insufficient funds to finance the whole concept, so she asked her family for help (invitation to treat? she most likely made a verbal offer to multiple family members - how do the courts view contracts made between family members? commercial context?).

Her cousin owned a number of business properties in Blacktown and agreed to let one to Louisa for half the rent he would normally charge (does this constitute acceptance of the offer? is there good consideration? it need only be sufficient (e.g. a peppercorn)). Louisa checked the building and told her cousin there were some alterations she would like to make to improve ventilation and allow easier access to the design studios. She told her cousin she would need to start on the alterations as soon as she received permits from the relevant local Council (notice of intention). She also undertook to pay for all the alterations herself; they were quoted at $39,000 (incurring expenditure under the contract - may be recoverable). However she told her cousin she did not want to waste these funds, so would not start unless her cousin was certain he would allow her to use the premises at half the normal rent (reasonable).

Her cousin replied that he would let her know within a week if he changed his mind about allowing her to use the premises (is this a case of silence constituting acceptance? has the cousin already accepted anyway? or is his 'lack of refusal' a condition precedent?). Louisa had explained to him that the work would take about three months to complete which would give her time to start her marketing campaign (expenditure - may be recoverable). It would also give her time to complete some design concepts which she thought would bring in a suitable income prior to the business commencing in the new premises (more expenditure - recoverable).

One week after speaking with her cousin Louisa approached the council, and commenced negotiations about work permits. Several weeks later, having received approval, work commenced (more than a reasonable time has passed).

Before any leases were signed and when the work was almost finished Louisa’s cousin told her he had received a better offer for the premises and was no longer willing to continue with the arrangements previously discussed (unconscionable and amounts to a repudiation of the contract - cousin is evincing an intention not to be bound by the terms of the contract - gives Louisa the option of terminating the contract and/or suing for breach and loss of bargain).

Just seems to be issues regarding the formation of the contract, plus estoppel.

 

[theone123]

Hi Laz. which significant cases would be a great connection to this question.

 

[Lazarus]

I really don't have time to keep giving you the answers - they're very standard cases. Find a textbook.

 

[theone123]

nm. Anyway, you and Minai have been a really great help, thanks for all the great advice

 

[theone123]

oh sweet.. heaps of thanz natstar

 

[dotdotdot]

hey, I was wondering if anyone could help me out with a tutorial question that I have for my business law unit.

A) Sheila went to Target in the Hay Street Mall and found an "Alf" doll on the shelf with a price tag of $33. Alf was a talking doll who, when you squeezed his arm, could recite more than 100 insults and swear words. She took Alf to one of the check-out lines but the cashier refused to take her money because, apparently, the price sticker had a typographical error (or just as likely, had been switched around by a vandal). The correct price was $79. Can Sheila insist that they sell her Alf for $33?

B) Alternative scenario: Alf is correctly priced at $79 but it was a busy Friday night and there was a long line at every cashier. Rather than miss the start of the movie at Hoyt's Cinema where she was meeting some friends, Sheila dashed for the exit. Not wanting to take the time to replace it on the shelf, Sheila put Alf onto the floor and kicked it out of sight under a piece of furniture. Unfortunately, the continuous pressure from being jammed in under the furniture soon caused Alf to swear himself to death before he could be rescued (his little motor overheated and expired!). Alf was repairable at a cost of $65. A security guard witnessed all this and lightly tapped Sheila on the shoulder before she reached the only exit to the store. He stated:

"You must go rescue that Alf doll and purchase it. Otherwise, you stay right here while I call the police on this mobile phone."

Sheila responded:

"I'm in a rush and have to go, but if you have a problem here is my business card with my picture, address and telephone number on it. You can find me if you have to."

The security guard just repeated his statement that Sheila had to buy the damaged goods or wait for the police.

Must Sheila do either?

Consider carefully the potential causes of actions between Sheila and Target under the alternative scenario. (keep in mind the doctrine of "vicarious liability", though you do NOT have to discuss that doctrine)

***

The thing that I'm not sure about with A) is what area of torts (if any!) it falls into. I have a feeling that this question has to do with the Sales of goods act but we haven't covered that in class yet. So I'm just really unsure about it.


For the most part I understand B) but we have limited notes in our texts on this area of torts, does anyone have any extra advice?

So does anyone have any like tips or anything at all to help me tackle the question … I’m not trying to get our of doing my work and I don’t expect anyone to like totally write the answer or anything but I just find this situation weird in relation to the things we’ve been learning.

thanks

ah ha! u must be from UWA !

 

[theone123]

Western Australia? :O

 

[dotdotdot]

Western Australia? :O

yes..University of Woop-woop Australia

 

[MoonlightSonata]

If someone as professional workmates, but are discussing an issue like property investment in an informal context, and this info is the sole reliance for a decsion, and this decision resulted in damages of eco loss and mental harm, does this person have a defence..Im soooooooo confused. Agh assignment due tomorrow

Negligent mistatement will be unlikely where there wasn't "reasonable reliance." Informal context detracts from it being reasonable. Their special skill and expertise adds to it being reasonable.

 

[MouNtY]

can i just say wateva uni's or wateva your currently doing....your people are very lucky to have yous